The economy expanded by just +0.6% y/y in Q1 and +0.5% in Q2 2019, a marked deceleration from growth of +3% in 2018 as a whole. The slowdown was broad-based. Private consumption increased by a meagre +0.7% in H1 2019 and fixed investment dropped by -9.7%. What’s more, external trade activity declined – with exports of goods down by -4.7% and imports by -5.9% – clearly reflecting shrinking demand from mainland China amid escalating U.S.-China trade tensions. However, some relief for the economy may come from two sources: (i) The shift to monetary easing in the U.S. is positive for Hong Kong’s financing conditions and should provide a boost to the property market. (ii) Mainland China’s fiscal stimulus is set to become stronger in the coming months and this could support a mild recovery of Hong Kong’s exports. Overall, we forecast full-year growth of +0.9% in 2019 and +1.4% in 2020. Ongoing social unrest – which so far does not seem to have affected financial markets – poses a downside risk to these forecasts.